Stock Analysis

As Nelson Resources Limited's market cap (ASX:NES) drops to AU$6.8m, insiders might be questioning their decision to buy earlier this year

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Insiders who bought AU$1.0m worth of Nelson Resources Limited's (ASX:NES) stock at an average buy price of AU$0.083 over the last year may be disappointed by the recent 12% decrease in the stock. This is not good as insiders invest based on expectations that their money will appreciate over time. However, as a result of recent losses, their original investment is now worth only AU$291k.

While insider transactions are not the most important thing when it comes to long-term investing, logic dictates you should pay some attention to whether insiders are buying or selling shares.

See our latest analysis for Nelson Resources

The Last 12 Months Of Insider Transactions At Nelson Resources

The insider Maosen Zhong made the biggest insider purchase in the last 12 months. That single transaction was for AU$951k worth of shares at a price of AU$0.089 each. That means that an insider was happy to buy shares at above the current price of AU$0.023. It's very possible they regret the purchase, but it's more likely they are bullish about the company. In our view, the price an insider pays for shares is very important. Generally speaking, it catches our eye when insiders have purchased shares at above current prices, as it suggests they believed the shares were worth buying, even at a higher price. Notably Maosen Zhong was also the biggest seller.

Over the last year, we can see that insiders have bought 12.65m shares worth AU$1.0m. But insiders sold 3.58m shares worth AU$101k. In total, Nelson Resources insiders bought more than they sold over the last year. The chart below shows insider transactions (by companies and individuals) over the last year. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

ASX:NES Insider Trading Volume February 23rd 2022

There are plenty of other companies that have insiders buying up shares. You probably do not want to miss this free list of growing companies that insiders are buying.

Insiders at Nelson Resources Have Sold Stock Recently

The last quarter saw substantial insider selling of Nelson Resources shares. In total, insider Maosen Zhong sold AU$101k worth of shares in that time, and we didn't record any purchases whatsoever. In light of this it's hard to argue that all the insiders think that the shares are a bargain.

Insider Ownership of Nelson Resources

I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Insiders own 8.3% of Nelson Resources shares, worth about AU$564k, according to our data. We do note, however, it is possible insiders have an indirect interest through a private company or other corporate structure. Whilst better than nothing, we're not overly impressed by these holdings.

What Might The Insider Transactions At Nelson Resources Tell Us?

An insider sold Nelson Resources shares recently, but they didn't buy any. But we take heart from prior transactions. But insiders own relatively little of the company, from what we can see. So we can't be sure that insiders are optimistic. In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Nelson Resources. For instance, we've identified 7 warning signs for Nelson Resources (5 are a bit concerning) you should be aware of.

But note: Nelson Resources may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

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